Circle of life signals trouble for Game Stop

Courtesy of Tech RaptorThe “Circle of Life” controversy was broken by Jason Scheler of Kotaku. Reportedly, the system has been used in practice since the early 2000s.

By Craig Taylor | Staff Writer

Video game retailer Gamestop’s employee program called “Circle of Life,” or COL has caused a controversy within the video game community after being brought to light in a report from video game news site Kotaku.

“Circle of Life” refers to the cycle of pre-ordering, trading in and selling used games that GameStop wants to see their employees to push onto customers. Every store must sell a set number of pre-orders, reward-card subscriptions, used games and warranties, and have enough trade-ins to reach a set quota. Each employee and store is given a COL score which evaluates how well they meet these demands.

However, sales goals do not include new games and hardware. This means that if a customer only buys a new game without pre-ordering another, or trading-in a game or buying a warranty, all of the scores for the employee and store that performed the transaction go down, resulting in them being reprimanded or even fired.

Consequently, a large transaction, like a $750 purchase of a new system, including new games and a new controller, is something that can hurt an employee’s record, which has led to some problematic sales practices, according to the Kotaku article.

The original report cites anonymous current and former GameStop employees who claim the pressure of the program forced them to deceive customers. One employee said that during a new game launch, they told customers they only had copies for those who pre-ordered the game, which was not true. Another employee admits to telling customers they only had the used version of a game available, even though it was more expensive than the on-sale new copies.

A former GameStop employee, who asked not to be named, told The Duke that her boss would switch old pre-orders to newer games coming out without the customer’s knowledge.

“Say you had something reserved, and it was months and months ago that it came out and you never picked it up. He would take the money you put down on that game and switch it to something that was coming out,” they said.

This employee was a former keyholder at GameStop but was demoted for not meeting her sales goals. She said she does not know how the company expected employees to reach their quotas.

While no hard numbers exist for how much money GameStop makes from a new game, games journalist Jim Sterling says most reports claim GameStop will make around $2 from a $60 new game sale. Conversely, GameStop receives all the money from a used game sale.

“What this means is that the primary way that both these [parties] are making their money actively [hurts] the entity they need to make that money in the first place,” Sterling said.

This has led to both sides of the exchange, the publishers and GameStop, trying to undercut the other for the past several years. Developer Silicon Knights’ president Denis Dyack went as far as to say used games were “cannibalizing” the games’ industry. Many companies, including Dyack’s, blamed used games for the financial failure of some of their projects.

To combat the sale of used games, publishers began to incorporate things like online passes, which were one-use codes that restricted online features of games to the original purchaser. The Xbox One was originally going to prevent the license of one disc from being transferred to another console, preventing the sale of used games. This was removed after outcry from consumers.

Sterling believe this competition is what created the Circle of Life program.

“Until physical media is totally obsolete, the games industry needs GameStop to sell its disks. On the other end of the table, GameStop needs the game industry to have the discs to sell,” Sterling said.

Sterling also says that this program has been around for at least a decade. When asked for comment, GameStop said this to Kotaku:

“All of GameStop’s internal programs are designed to provide our customers the best value in all their video game purchases, including new and pre-owned merchandise. With any program, opportunities arise for improvement and we will continue to refine it to equip our knowledgeable store associates to provide a great store experience.”